Gaza may Dent Metals

What's going on in the Middle East?

Fears of a bigger crisis have been aroused by an attack by a Hamas faction backed by Iran, which has left the Middle East in upheaval. There have been rumours regarding this conflict's possible effects on the burgeoning Iranian economy. 

As a result, although oil and Treasuries increased, U.S. stock futures declined in Asia on Monday. Due to this circumstance, investors are looking for safe-haven assets like gold and the Japanese yen in the financial markets.

Impact on Global Market

The global market has been rocked by the Middle East conflict. Global financial markets are volatile and unclear due to the increase in oil prices and the possibility of supply interruptions. The U.S. dollar has declined and the euro has lost value as a result of investors' flight to safe havens like gold and Japanese yen.

Overview of the Impact on the Metal

Steel

According to Metal Miner, the conflict between Israel and Hamas in Gaza has caused alarms to go up in supply chains for steel, oil, and other commodities. The article stated that if the war continues, it may have a negative impact on the price of steel and many other commodities. 

It also mentioned that Indian and Russian steel exporters, as well as Turkish and Russian steel exporters, are also concerned about the war.

M&As of Copper

According to Reuters, which cites industry insiders, a flurry of copper mining agreements are being arranged over the next six to twelve months as producers strive to distribute the skyrocketing cost of new projects for the metal essential to the energy shift. 

In recent years, the average amount of capital required to establish new mines has increased by 50 percent to $3–4 billion, mostly because of diminishing ore grades, tighter environmental regulations, and growing labour costs.

Overview of the Catastrophe

1. Increasing trade expenses from that region will result from uncertainties around supply chains, trading routes, and delays.

2. The world has been full of uncertainty, from the Covid-19 outbreak to geopolitical difficulties like the war between Russia and Ukraine. 

3. If the crisis escalates, shipping bottlenecks, rising freight rates, and unpredictable delivery times will impact our global supply chain.

Positioning of India in this Challenge

The PHDCCI guaranteed that the Indian government will, as it has in the past, protect the economy from significant shocks and volatility through efficacious reform measures. The PHDCCI would put out endless effort in collaboration with the government to execute the reform measures and support the Indian MSME in the face of any obstacles.
On the other hand, India has demonstrated its tenacity by controlling inflation and drawing foreign direct investment. PHDCCI and the government have been working together nonstop to keep India at the forefront of international economic discourse.

India Becomes a Net Importer of Steel

For the first time in over three years, India has become a net importer of steel, incidentally, in the context of steel manufacture. In fact, during the July–September 2023 quarter, 1.50 million tons (MT) of completed steel products were imported, representing an 8% increase from the previous year. 

The difference between imports and exports was 0.34 MT. Additionally, between April and September of 2023, the output of crude steel by Indian companies increased by 14.7% to 69.65 MT. Comparing this to the same time last year, there are 61.06 MT more.

Furthermore, although China is still the largest supplier of steel to India, a number of other countries, like the UK and Russia, are still ranked higher. Russia rose to the position of second-largest semi-finished steel supplier to India earlier in the year. 

Additionally, Russia overtook Japan to take the second spot on the subcontinent's list of suppliers of hot rolled coils and strips. China, the neighbor of India, also depends on steel from South Korea, Japan, the United Arab Emirates, and Saudi Arabia.

Conclusion

Experts predict that these most recent events will keep pressure on global steel prices in the meantime. After all, the oversupply, the decline in European demand, and the slowdown in Chinese construction activity had already put stress on the market.